Reuters: US Dollar Report: FOREX-Yen regains ground, commodity currencies falter

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FOREX-Yen regains ground, commodity currencies falter Apr 15th 2013, 08:46 Mon Apr 15, 2013 4:46am EDT * Yen rises after U.S. warning on competitive devaluation * Weaker-than-expected Chinese GDP spurs safe haven demand * Euro dips vs dollar, holds in sight of one-month high By Nia Williams LONDON, April 15 (Reuters) - The yen climbed against the dollar and euro on Monday, helped by a U.S. Treasury report saying it would watch Japan's policies to ensure they were not devaluing the yen for competitive advantage. The highly liquid Japanese currency, which is considered a safe haven and tends to benefit in times of stress in the global economy, was also lifted by below-forecast Chinese growth data. Commodity currencies and the euro also slipped after Chinese GDP data as investors shunned currencies perceived to be linked to the global growth outlook. The dollar dipped 0.4 percent on the day to 97.93 yen, having dropped as low as 97.55 yen in Asian trade. It hit a four-year high of 99.95 yen on Thursday, and hefty resistance was expected ahead of the 100 yen mark. The euro fell 0.8 percent to 127.92 yen, paring losses after earlier dropping to 127.56 yen, its lowest in a week. Last week, the euro touched 131.10 yen, its strongest in more than three years. The explicit statement from the United States rang alarm bells before a Group of 20 meeting beginning on Thursday. Investors were wary that other countries may complain about, or seek to stem, the yen's rapid decline that accelerated after the Bank of Japan unveiled radical easing steps on April 4. "There has been a risk-off reaction to Chinese GDP, which (tends to mean) yen stronger, while the statement on Friday from the U.S. Treasury comes back to the theme of currency wars," said Jane Foley, senior currency strategist at Rabobank. "There's the risk of political resistance to a significant fall in the yen." The dollar jumped more than 7 percent in the week after the BOJ announced its plans to beat deflation. While many analysts see the dollar rising past 100 yen in the near term, some said profit-taking and a pullback in the U.S. currency were to be expected after such a sharp climb. Some strategists said figures on Friday showing a contraction in U.S. retail sales also curbed demand for the dollar against the yen by reinforcing expectations the Federal Reserve will continue buying bonds to support the U.S. economy. "As expectations of the Fed winding down QE (quantitative easing) retreat, the reasons for buying the dollar are also decreasing," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo. One factor that could potentially support the dollar against the yen however, is the escalation of tension on the Korean peninsula. GROWTH-LINKED CURRENCIES SLIP The Australian dollar fell 0.75 percent on the day to US$1.0427 after the annual rate of growth in China, Australia's biggest export market, unexpectedly slowed in the first three months of this year. The New Zealand dollar slid 1.2 percent to US$0.8488, retreating further from a 20-month high of US$0.8676 hit on Thursday. The euro fell 0.3 percent to $1.3068, not far off Thursday's one-month high of $1.3138. The single currency has seen resilient demand despite signs of renewed tension in the euro zone following a bailout for Cyprus and on political uncertainty in Italy. Rabobank's Foley said the euro was benefiting from a run of lacklustre U.S. data that was limiting demand for the dollar. "There are a lot of things to worry about in Europe but there's a lot of good news already priced into the dollar, and the data has been disappointing," she said. Link this Share this Digg this Email Reprints

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